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The week that was

Richard Umbers (left) was pushed out by the Myer board, now headed by executive chairman Gary Hounsell

Another chaotic week in retail with major changes made at some of the largest local names, underpinned by a mixed-bag of trading updates.

Umbers pushed out

There’s simply no other place to start than the major story of the week – with Richard Umbers quitting his post as Myer CEO and managing director after a meeting with new executive chairman Gary Hounsell.

Formally the deputy country manager for Ikea in Russia, Gardberg brings 32 years of international Ikea experience to the role – and has plans for expanding the Ikea business in Australia.

Elsewhere, Steinhoff International appointed ex-KPMG executive Richard Heis as its chief restructuring officer, as the investigation into South African-based, Frankfurt-listed retailer’s “accounting irregularities” continues.

Heiss was previously global head of restructuring at KPMG and has 25 years’ experience in restructuring complex and international groups, according to Steinhoff.

Trading time

Electronics retailer JB Hi-Fi Group unveiled double-digit increases in earnings, profit and sales for the six-months ended December 31, driven by a strong result over the holidays that has buoyed its full-year expectations.

JB’s net profit after tax (NPAT) increased by 21 per cent to $151.7 million in the first-half on the back of a 24.9 per cent increase in earnings before interest and tax (EBIT) over HY17 to $225.8 million.

Baby Bunting posted double-digit profit and earnings declines for the first-half of fiscal 18, weighed down by slower sales and investment in lower prices amid consolidation in the sector.

Domino’s downgraded its second-half same-store sales guidance in Australia after a slowdown in the first half, posting its weakest half-year profit in over a decade.

Property developments

“Not all retail assets are created equal”, said Broadway Shopping Centre’s owner

After a slow start to 2018, the property sector of the industry decided to all announce new tidings.

New retail investment is a key factor underpinning a forecasted surge in construction activity, according to Master Builders Australia.

“Of this, $6.9 billion is forecast to come from the influx of international retailers into Australia – particularly the arrival of Amazon and expansions by Costco and Aldi,” said Matthew Pollock, Master Builders national manager, economics.

Subdued economic growth in Australia, in particular wages growth, have characterised a challenging retail environment, according to Kelley, who said while there were signs of improving economic conditions in late 2017, this may take time to flow through to increased retail spending.

The owner of landmark malls, including the Highpoint Shopping Centre in Melbourne, has posted a 2017 full year net profit increase of 10.1 per cent to $1.27 billion. Funds from operations rose by 3.2 per cent to $554.2 million driven by strong contributions from its Australian investment property portfolio.

Large Format Retail Association CEO Philippa Kelly said an extra 61,400 jobs would be created in NSW over the next seven (7) years by big box retailers, ‘if restrictive planning laws’ are overhauled by the State Government.

Large Format Retail Association members include the likes of Harvey Norman, Ikea, JB Hi-Fi, Super Retail Group and Beacon Lighting.

Kelly said the industry would be able to deliver an employment boom to NSW under a more favourable policy environment and that “in NSW there is no clear definition of the sector in legislation unlike other states like Victoria, South Australia or Western Australia”, which she said gave the states a competitive advantage.

Eco retailer, Biome and Cotton On have been recognised as finalists for the Responsible Retailer Initiative of the Year, competing with the likes of The Body Shop (United Kingdom) and Coop Switzerland (Switzerland).

Wine e-tailer Vinomofo was shortlisted for the Retail Transformation and Reinvention award, coming off the back of its first year in the Singaporean market, where it’s now sold over 150,000 bottles of wine.

Supercheap Auto and Suncorp Australia were shortlised for oustanding store design while Modibodi was shortlisted for the Retail Startup of the year award.

Scheme delays, litigation and wages growth

Industry bodies, National Retailers Association (NRA) and Australasian Association of Convenience Stores (AACS), welcomed the Queensland Government’s decision to push back the start date for the state’s container deposit scheme to November.

The scheme was due to kick off on July 1 this year, however, QLD Environment Minister Leanne Enoch has delayed the implementation following consultations with stakeholders.

Earlier this week, the NSW premier admitted her government’s controversial container deposit scheme has had “teething problems” after the opposition revealed consumers were out of pocket by $100 million.

Under the so-called “return and earn” scheme, which started December 1, the NSW public had paid $110 million in higher beverage prices but only $8.3 million had been returned to consumers as of Monday, the opposition said.

Meanwhile ANZ bank will be targeted in a Sydney law firm’s class-action after thousands of 7-Eleven convenience store workers were underpaid across Australia.

The convenience chain was forced to pay back millions of dollars to thousands of workers after it was revealed in 2015 that there’d been rampant wage theft across hundreds of stores.

Cleaning contractors at 90 per cent of Woolworths’ Tasmanian supermarket sites were found to be not complying with workplace laws, according to a Fair Work Ombudsman Inquiry.

In a petition launched on Tuesday, World Animal Protection (WAP) called on Aldi Australia to match its competitors and introduce a comprehensive animal welfare policy for its home brand products.

The Reserve Bank expects wage growth to pick up eventually even though companies are currently reluctant to raise salaries for fear of becoming uncompetitive.

Heightened competition in retail – which has led to the demise of stores including Dick Smith, led to profit warnings from the likes of Myer, and created margin pressures at retailers including JB Hi-Fi – means there is still firm resistance to lifting wages.

Final scramble

Billabong’s board continued to recommend company shareholders vote in favour of the proposed acquisition by US firm Boardriders, after independent expert Grant Samuel & Associates said the scheme was fair and reasonable.

Under the deal, Catch will range, operate, fulfil and service a dedicated Mamamia shopping website, while the publication will lend branding to the website alongside the influence of its editorial arm.

Kmart MD Ian Bailey meanwhile told an audience at a Property Council of Australia breakfast event that the retailer is fundamentally dissatisfied with the discount-department store chain’s ability to meet evolving customer expectations.